RunawayTrader

Some months back, I mused about my growing positions in precious metals, particularly gold, silver, and platinum. My reasoning was simple: I wanted to put some of my portfolio in metals—just in case the stock market falls apart on a more devastating level than on 9/11.

The bottom line was I wanted my metals inventory to keep pace with the lousy rates banks are paying on CDs, money markets, and savings. It’s done that and much, much more.

Having said all that, I didn’t expect metals to surge to the degree they have. And platinum has been going gangbusters lately for reasons, I confess, I just don’t know. Maybe the Russians  (they’re the biggest producers of this stuff) are cutting back production. Maybe platinum is the new gee-whiz in the jewelry market. I don’t know.

In case you haven’t been following metals lately,  take a look at this chart I swiped from Kitco. Platinum is up nearly $450 an ounce since mid-July. That’s almost 40 percent. In fact, it’s up $36 today alone!

No, I wasn’t smart enough to buy platinum when it was $1,150, but I did buy some 1 oz. bars at $1,198 and more around $1,300. You do the math. It’s a nice runup in six months, and a better rate of return that US Bank, which I recently bitched about when they paid me a lousy 79-cents interest on something like $10,000. You might just as well put your cash under the mattress at rates like that.

Other Metals Doing Well

My other metals purchases are still doing well, too. I bought gold (Krugerrands) at an average of $773. With spot gold at $1,138 the Krugerrands are now worth $1,152. And the silver ingots I purchased last March at $14.63 an ounce are now up to $18.63.

Still, platinum is doing best of all, and I expect it to inch higher. Why? Well, other than jewelry, the primary use of platinum is in auto catalytic converters and when auto production ramps up, I expect platinum demand will rise with it. Expecially when you think about the huge auto demand growing in China.

Perhaps not like the rocket-trip it took back in 2008, but higher, nonetheless. Bloomberg seems to agree. Here’s what they wrote in an article yesterday, an opus which probably had something to do with the huge runup today.

So where to from here? Well, just because I like pretty things, I placed an order with Apmex for the 2010 Silver American Eagles. Not to be confused with that crap that they so often sell on TV and on some Internet sites, these are brilliant uncirculated coins which will be released by the mint (yeah, the real one) sometime this month or next.They look a lot like the old walking liberty half-dollars. Beautiful coin.

I locked in my price at $19 and change a month ago. Apmex is now selling these beauties at about $22. And if you hate the prospect of shopping around, you can also order them from an outfit that calls itself GovMint.com, but you’ll pay $36.95 or $26.95—depending on which is the typo to believe when I last visited the site.  (Maybe you should think about buying them from Apmex and selling them to GovMint!!).

Meantime, I’d like to buy more gold but I think I’ll wait until it drops back below $1000 an ounce. Maybe that’ll happen when I’m on the road. My getaway date draws near.
Charlie, the Runaway Trader